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Visa, Mastercard enlist fintechs to reach Latin America’s unbanked | PaymentsSource

Visa and Mastercard are courting fintech companies to help them reach more consumers in Latin America, as a large unbanked population has turned to unbanked institutions for financial services.

As tech companies gain access to a market that banks haven’t adequately served, tech partnerships have become vital to U.S. card networks’ efforts to expand across borders.

“We assist our partners in the United States and around the world in a range of areas including digital wallets, crypto-related card software, digital banking, buy now/pay later, B2B payments, cross-border transfers, bill payments, payments infrastructure and “P2P payments,” said Terry Angelos, Global Head of Fintech at Visa.

Only 56% of people in Latin America have a traditional bank account, according to the World Bank (by comparison, 85% to 90% of the US population is considered banker, according to Aite-Novarica). However, many Latin Americans who are unbanked open accounts with fintech companies. Americas Market Intelligence estimates that more than 120 million Latinos — 33% of the region’s total population — used digital-only bank accounts or mobile wallets as of the end of 2020.

This has resulted in Latin America becoming a hotbed for FinTech development. Half of Latin Americans with traditional bank accounts also have digital wallets or digital-only bank accounts, according to Market Information of the Americas. In Brazil, for example, 88% of the population in 2021 had digital accounts with banks and/or fintech companies, the company says.

The success of new banks and digital wallet providers in Latin America provides opportunities to issue cards for Visa and Mastercard.

Nubank is one of the 100 fintech companies in Latin America and the Caribbean that offer Mastercards. US-based card networks use these partnerships to reach the region’s large unbanked population.

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As of November 2021, 100 fintech companies in Latin America and the Caribbean have issued a total of 100 million digital Mastercards in the region. These issuers include digital wallet providers such as Argentina Stop And new banks like Brazil nubank and C6 Bank.

“In Latin America, many of the Visa cards issued by our new bank and digital wallet partners are debit cards,” said Arnoldo Reyes, Head of Fintech, Ventures and Business Development at Visa. For example, [Latin American on-demand delivery company] Rabbi It issues Visa debit cards linked to its Rappi Pay wallet, and recently launched Visa credit cards which have seen tremendous growth.”

At Mastercard, fintech’s strategy goes beyond card issuance, according to Tim Montgomery, senior vice president of digital partnerships at Mastercard.

“We are building our digital footprint by expanding our fintech strategy to include new areas of growth,” he said. “We believe in empowering everyone to participate in the modern economy with the first digital payment tools, provided by fintech companies to consumers and [small and midsize businesses]. “

Both US card networks have established programs to build relationships with Latin American fintech companies, which are part of global fintech programs.

“We are working with a number of fintech companies in Latin America through the Visa Fintech Partner Connect Program,” Reyes said. “This provides a Visa-branded portal where the FinTech companies we have formal partnership agreements with are listed as preferred partners whose solutions are available in different markets.”

Mastercard’s Start Path program enables the company to collaborate with later stage fintech companies that will not necessarily issue Mastercard-branded cards, but add value to the payments industry.

“Globally, we have 270 companies in the Start Path portfolio and have invested in 28,” said Thiago Dias, Mastercard’s Vice President for Latin America and the Caribbean and Enablers.

In November 2021, Mastercard acquired alumnus of Start Path in New York and Mexico City, which operates bill payment networks in the United States and Mexico, to extend MasterCard BellPay to Latin America.

Visa has introduced the Visa Everywhere Initiative program in Latin America for the past five years.

“The financial companies participating in VEI sign business partnerships with Visa, and we distribute their products to our customers throughout Latin America,” Reyes said. “Over the past 18 months, open banking and cryptocurrency have been very important to us. There is a very symbiotic relationship between Visa and the companies in those places.”

In addition to partnering with new banks and digital wallet companies, Visa is focused on developing financial infrastructure, with the goal of modernizing the financial services industry in Latin America.

“The financial services infrastructure in Latin America is mostly outdated, so we are working with fintech companies that offer digital issuance processing or card issuance platforms, enabling other entrepreneurs to build on modern infrastructure,” Reyes said.

In 2019, Visa invested in the Miami-based banking-as-a-service provider NovoPayment Which enables Latin American companies to issue cards on its platform. In November 2021, Visa formed a partnership with the Latin American provider of open finance and digital identity verification bellvo and invested in the company.

“Our open finance API platform allows banks and digital wallet providers to share financial data with their customers with their consent,” said Pablo Figueira, Belvo Co-CEO. “For example, a bank that wants to lend to a consumer who has a digital wallet can only view the borrower’s income and spending history. We want to collaborate with Visa so that we become their preferred open financing partner when they provide services to their issuers.”

Cryptocurrencies are a major focus of Mastercard in Latin America.

“We are working with most of the cryptocurrency fintech companies in Argentina, Brazil, and Mexico to develop the software,” Dias said. “This is a key component of our multi-country strategy to touch the different money flows beyond cards. Other areas of focus in Latin America include digital onboarding, identity verification, credit access and financial management.”

“We are developing partnerships with fintech companies that can improve our business, and connect their technology to our platform,” said Giancarlo Greco, CEO of Elo, about the Brazilian card network’s strategy to reach new markets.

Mastercard has partnered with Start Path alumni of San Francisco-based Juvo to provide unbanked consumers in Latin America with access to credit. Juvo, which received an investment from Mastercard, relies on borrowers’ mobile account data to provide Latin American lenders with credit references.

US-based Flourish FI, which joined Start Path in August 2021, provides US and Latin American banks with a white-labeled app that uses gamification and behavioral science to promote positive financial habits.

To expand the adoption of open banking in Latin America, Mastercard plans to bring in Accuracy, the US Open Banking pool it acquired in 2020, to the region. “We plan to bring Finicity to Brazil first because it is the largest country in Latin America and its open financial regulations are the most developed,” Dias said.

But the bridge between the United States and Latin America runs in two directions; Elo, a Brazilian card network founded 10 years ago by three banks to challenge Mastercard and Visa’s dominance of the card market in Brazil, is working with explore. Their partnership allows Elo cards, which are issued only in Brazil, to be accepted in the US and other global markets through the Discover Network; Also, in Brazil, Elo issues Discover’s Diners Club International cards.

Elo is designing her FinTech Partnership Program on Mastercard’s FinTech platform. About 10 million Brazilian merchants accept Elo cards and 50 million active Elo-branded cards have been issued by Brazilian banks.

“We develop partnerships with fintech companies that can improve our business, and connect their technology to our platform,” said Giancarlo Greco, CEO of Elo. “The only way to do that is by following Mastercard’s standards. Mastercard has a flexible and dynamic platform, and if you don’t have that kind of platform, you can’t partner with fintechs.”

Several Elo fintech partners offer services in the United States, including Mexico-based Kublau, which assists issuers onboard and activates new cardholders; and Portugal-based fraud prevention seller Feedzai. Greco said US fintech companies could partner with Elo as a way to gain access to the Brazilian payments market. “We can certainly incorporate American technology into Elo, and we want to do that,” he said.


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